The Construction Products Association's latest State of Trade Survey indicates that, following a relatively good first quarter of the year, product manufacturers suffered from a slowdown in sales in Q2 and are extremely concerned about demand going forward.
Commenting on the figures, CPA senior economist Kelly Forrest said: ‘With public sector cutting spending and private sector construction adversely affected by events in the euro zone, it is unfortunately unsurprising to see product sales affected in Q2.
"Heavyside manufacturers reported that sales fell compared with Q1 and compared with a year ago. Sales of lightside products, which tend to be used later in the construction process, continued to rise in Q2, yet the fall in heavyside sales suggests the second half of the year will become increasingly challenging.
"Nearly all of the firms responding to the survey expressed concern about the strength of demand over the next 12 months. It is their primary concern.
"Despite recent falls in oil and commodity prices, cost inflation continues to be a serious issue for product manufacturers. Eighty-four percent of heavyside firms and 62% of lightside firms reported that costs continued to rise as long-term contracts have ensured that recent price falls have not fed through yet.’
"Manufacturers continue to be boosted by exports, as 11% of heavyside manufacturers and 25% of lightside manufacturers stated that exports rose over the past year. Furthermore, a larger number of both heavyside and lightside firms are turning to exports to offset subdued domestic demand. Approximately 40% of heavyside firms exported products in Q2 and 70% of lightside firms reported that they were now exporting."
Other key points include: